Wage standard is main point of controversy in forthcoming intersectoral negotiations

Intersectoral negotiations to set a framework for collective bargaining in Belgium covering the period 1999-2000 were due to begin in late September or early October 1998. Preliminary talks between employers and trade unions on the way in which the "wage standard" or pay guidelines must be calculated have begun in the Central Economic Council. However, the government and the two sides of industry are poles apart regarding the need for such pay guidelines and the way in which they should be calculated. If the negotiators fail to agree, the forthcoming intersectoral negotiations will once again have a rough ride.

In the early 1990s, the Belgian government of the time enacted a law on competitiveness. This law stated that pay increases agreed through collective bargaining must be limited to the so-called "wage standard" (or pay guidelines). This standard shows how much nominal wages may increase over two years, taking into account expected pay trends in countries neighbouring Belgium. The provisions of the law stipulated that nominal wages over 1997 and 1998 could rise by a maximum of only 6.12% (BE9702101F).

According to the law, before negotiations proceed, the government and the two sides of industry must agree on the standard and on the way in which it must be calculated. With intersectoral negotiations to set a framework for collective bargaining covering the period 1999-2000 due to begin in late September or early October 1998, negotiations on the wage standard opened in the Central Economic Council (Centrale Raad voor het Bedrijfsleven/Conseil Central de l'Économie) in early September. The negotiators are at odds, however, both over the need for a wage standard at all and especially over what is to be understood by the term "labour costs".

For and against a wage standard

The socialist-oriented Belgian General Federation of Labour (Fédération Générale du Travail de Belgique/Algemeen Belgisch Vakverbond, FGTB/ABVV) is pressing for the abolition of the wage standard. In the countries neighbouring Belgium, which are used as a reference for the wage standard (Germany, France and the Netherlands), no such device is applied. The ABVV/FGTB is convinced that employer and union negotiators are capable of settling reasonable wage increases amongst themselves. The ABVV/FGTB takes the view that negotiations must be allowed to proceed freely at intersectoral and then at sectoral level, without rigid prior undertakings as to what is and is not open to discussion. Meanwhile, the ABVV/FGTB has put forward a long "shopping list" of demands to be negotiated during the intersectoral negotiations on the 1999-2000 agreements. These include the generalisation of the 38-hour working week, an increase in the minimum wage, improved status for part-time workers, better suppression of illicit work ("moonlighting") and increased efforts to improve the education and employment of so-called "groups at risk" (such as low-skilled and long-term unemployed people).

The Confederation of Christian Trade Unions (Confédération des Syndicats Chrétiens/Algemeen Christelijk Vakverbond, CSC/ACV) also finds the wage standard hard to accept. However, it is not so fundamentally opposed to it as the ABVV/FGTB. The ACV/CSC believes that the employers and trade unions themselves must agree on a reference figure, without the "big stick" of a wage standard imposed by the government.

The employers' organisations want the wage standard as described in the law on competitiveness to be retained in its present state. They maintain that the health of the Belgian economy is helped by moderate pay increases; this is the condition for bringing about an increase in the number of jobs.

Naturally, the government is in favour of the wage standard, and it opposes a standard that takes account of differences in sectoral capacity (which the ACV/CSC advocates). The law is not too rigid, argues the government, as a good many companies have managed to overcome this supposed rigidity, for example through promotions or other forms of fringe benefit.

How should the wage standard be calculated?

Besides the differences of opinion in the discussions for and against a wage standard, there is also lack of consensus regarding its calculation. Central to these discussions is the question: what must be taken into account when determining a pay increase? This question is certainly crucial for the success of the negotiations on a wage standard. The more that is left out of the calculation, the more readily the social partners on the workers' side will reach agreement - but the more labour costs rise, the less happy the employers are likely to be. The main problem centres on defining the term "labour costs": working time, employers' contributions, in-service training, supplementary pensions, forms of financial participation and job evaluation have all proved controversial - should they be included or not?

The question as to what precisely falls within the scope of the term "labour costs" is less straightforward than may appear. Labour costs can rise through the reduction or redistribution of working hours, a major theme in current discussions. According to the employers, a factor of this kind must be taken into account in the wage standard, which would seriously compromise the chances for agreement on the redistribution and reduction of working time. The unions oppose the inclusion of this factor in the calculation of the wage standard on the grounds that redistribution of work and reduction of working hours benefit job opportunities and must therefore be excluded from the wage standard.

Another bone of contention is the question of reductions in employers' social security contributions and the way in which these should be taken into account. If reductions in employers' contributions are off-set against increases in labour costs, then the state social security system would in fact be funding wage increases. There would then be a redistributive effect from the non-active to the active segments of the population. The unions also want copper-bottomed guarantees of extra employment in exchange for labour cost reductions.

A further concern centres on the costs of in-service vocational training. As a condition for a general reduction in labour costs of BEF 9 billion, the employers have undertaken to spend BEF 20 billion on training over the next six years. Federal employment minister Miet Smet argues that this will not increase labour costs: a company that contracts out the training of its workers enters it in its accounts as "services to undertakings" and not as "staff costs".

Supplementary pensions are also a concern. The government shares the employers' view that they should be kept outside the standard, but the unions oppose this stance. Then there is the problem of capital or profit-sharing. The government has no objections to promoting this kind of indirect remuneration. The ACV/CSC is against it; its president, Willy Peirens, argues that a government that says it does not have enough money to do more about employment can hardly release money for measures that will benefit only the high-paid. Profit-sharing has so far been left out of the wage standard. This topic had been expected to come up at on the occasion of the last set of sectoral negotiations (1997-8). Belgium has no tradition in this field, but profit-sharing was one of the few opportunities to circumvent the wage standard and, therefore, the sanctions on wage increases. Yet this topic hardly arose in the agreements that were negotiated, which is probably explained by the absence of legal regulation on the matter.

One final item for discussion concerns the directives the government has enacted in accordance with the EU Employment Guidelines 1998 on gender-neutral job evaluation. Since job classifications can be a source of pay discrimination between men and women, they have to be revised and, where necessary, recalibrated with a view to guaranteeing equal pay. Minister Smet's (personal) position is that: "unequal appreciation creates a fundamental inequality between workers that, from a social point of view, needs to be corrected. In my opinion, the possible cost increases must be left out of the wage standard. Companies should have the chance to spread the costs of this revision over time".

Commentary

The views of the different negotiators - employers, unions and government - are sometimes very dissimilar. Negotiations within the Central Economic Council thus promise to be difficult. If the negotiators do not manage to come to an agreement, it will be up to the government to cut the knot. The government is prepared to allow the negotiators until mid-October. There should be some clarity by then. Extending this round of discussions is not desirable, because the sector-level pay talks would then coincide with the political elections. Such a situation is best avoided.

It has not been said in so many words, but no one is really optimistic about the success of this round of negotiations, nor about the negotiations for a new intersectoral agreement. All the social partners may well explicitly "support the consultative model" and "hope to see an agreement between the partners without the government interfering", but views seem still to be very wide apart. The government has in any case taken clear account of the scenario in which it has to accept its responsibility and introduce a wage standard as it did for the 1997-8 agreements. Its position has since become clear: a flexible, minimalist standard that still leaves room for limited wage increases. (Hans Bruyninckx, WAV)

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